1. What are the main reasons for an ALTCS Application to be denied?
You or a loved one need help with activities of daily living. The cost of care can be as much as $8000 per month. Being denied Arizona Medicaid Insurance benefits or ALTCS can be both emotionally and financially devastating.
Here are the main reasons that a claim is denied.
First, not responding to the Request for Information or RFI within the allowed timeframe. ALTCS allows 15 days from the date they make a request. If the information is not provided to ALTCS, the claim will be denied.
If requested, the ALTCS financial caseworker can provide a five-day extension, which is twenty days. Again, this is a hard deadline, and the application will be denied if the information requested is not provided.
Fifteen days or even twenty doesn’t sound like a lot of time. If you’re prepared, this is ample time to provide the information. Be prepared to provide the following information before you apply.
A. Current bank statement for the month of claim
The month of claim is the month the application is started. Providing the current bank and financial statements from companies like Fidelity, E*TRADE, or SEI Private Trust Company may seem like a simple enough request.
However, some applicants and their families who are helping them apply are often challenged by this simple request.
Here is the problem.
When the ALTCS financial caseworker asks for a particular month, let’s say July. They want the entire month, meaning from the first to the thirty-first, and if the statement states one of six pages, all six pages need to be provided.
Often, a family will provide the 1st to the 28th or 29th or only provide five pages because there is advertising on one of them or a blank page.
Both are a problem and can cause a claim to be denied!
“I had a family that could not seem to get their heads around this request.”
They provided the statement for the month of the claim. That month had thirty days in it; they only offered a statement from the first to the twenty-seventh, not the thirtieth!
The application was denied!
They said they could not provide the last three days in it because the bank statement cuts off or ends on the twenty-seventh. I explained to them that they could go to the bank and ask the banker to set a date ranging from the first to the thirtieth or they can do the same thing with online banking.
In fact, here are YouTube videos that show how to do this:
Bank of America: https://www.youtube.com/watch?v=HTyIWNRZog8
Chase Bank https://www.youtube.com/watch?v=67PaNmypepo
Wells Fargo: https://www.youtube.com/watch?v=w07nMNcKSUY
Other banks, even credit unions, all have ways to do this, or go to the branch
What happened next with this claim? Our office reopened the application.
Now, you would think that after being denied once, they would know that this was serious and they needed the entire financial statement, all pages, and the entire month, RIGHT?
No, they did precisely the same thing again, and the application was denied again.
B. Not being available for the medical (PAS) or financial assessment appointment
This is a no-brainer. The ALTCS case workers, both financial and medical, have a very heavy caseload. So it is important you make sure that you are available for both appointments. If you can not be available at the scheduled time, let the caseworker know so it can be rescheduled.
If you are a no-show, the application will be denied. Most of the time, immediately. And it is nearly impossible to get it reopened. So, you are forced to start a new application.
Here is where hiring a professional Certified Medicaid Planner helps. A CMP takes the case carefully and makes sure that all the requirements have been met.
If not they will let you know and help to get an extension if needed.
C. Life Insurance Policies:
Life Insurance Policies may be the number one reason ALTCS applications are denied.
This is true due to several factors:
- The most cash value an applicant can have is $1,500. This means $1,501 will cause a denial.
2. You must provide a statement of benefits from the insurance company. The statement must show the policy number, death benefit, premium, and cash surrender value.
This can be somewhat of a challenge due to HIPPA.
The insurance companies will need to speak to the owner of the policy or their POA.
In order to speak to the POA the insurance company must have the POA on file. Getting it to them and having it reviewed by their legal department can take time. So do this in advance of applying.
Some insurance companies are more difficult than others. Some will email email or fax the request out, while others will only mail it out via US mail. Even well-known life insurance companies have absolutely terrible customer service, so don’t assume a household name company that holds your policy will not have any issues.
And with some insurance companies, be prepared to sit on hold for thirty minutes to an hour before they pick up the phone.
These delays cause an application to be denied, so again, plan ahead.
Our office can help here if you have a life policy plan ahead of time, knowing they can cause the claim to be denied.
Call and talk to Certified Medicaid Planner™, Steve Dabbs, CMP™, at 480-967-8477.
3. Another issue for some is that people choose not to apply for Arizona Medicaid or ALTCS.
They don’t for a number of reasons, like:
A. They have been told that Arizona Medicaid or ALTCS Insurance is only for the impoverished.
B. They believe their assets are too high.
C. All ALTCS care providers are substandard or inadequate.
D. They believe that they will have to give up control of their assets.
E. They think it is too late to plan.
F. They are confused or have been misinformed.
Each of these is easily debunked.
A. Arizona Medicaid or ALTCS Insurance is only for the impoverished.
On the surface, this is true. However, there are legal ways to reposition or reduce assets without just spending them down.
B. They believe their assets are too high.
As explained in number one, there are ways to convert assets so they do not count against them and allow the applicant to be approved.
In my book, “Medicaid is for Millionaires and Everyone Else.” I talk about the number of ways and tools this can be used.
C. All ALTCS care providers are substandard or inadequate.
I can show you places that offer private pay only, where I would put a dog, and I can show you places that accept Arizona Medicaid – ALTCS that are less than a few years old and beautiful!
I think the real issue is that individuals and families try to navigate the process of finding a suitable place to move to on their own.
D. They believe that they will have to give up control of their assets.
Assets can be gifted to a loved one that you “TRUST” to hold them even if you need them for additional care or needed purchases in the future.
A Medicaid Asset Protection Trust or a Special Needs Trust are also useful tools.
This can be expensive to set up and manage, but the good news is that in Arizona, you can go to a Legal Document Preparer to prepare these documents at a much lower cost.
E. They think it is too late to plan
There are two types of planning: non-crisis and crisis planning.
If you are just now realizing that you may need long-term care in the future but are somewhat healthy now, it is time to plan.
On the other hand, if you or a loved one recently found yourself in a hospital or rehab due to a stroke or fall, it is not too late to work with a Certified Medicaid Planner who will help you qualify. This is crisis planning.
Depending if you are married or single you can still preserve assets and get the care you need.
F. They are confused or have been misinformed.
I’m absolutely convinced this is the main reason. Seemingly knowledgeable people provide misinformation.
This is true because your Uncle in “Iowa,” where the gifting and transfer rules are completely different than Arizona. Tells you that you can not make a gift and qualify for ALTCS. This is because the state of Iowa will demand repayment from the person to whom the gift was made.
Well here is the truth, Arizona allows gifting of assets.
People are told their assets are too high or their income will cause them to be denied. ARIZONA allows the use of an Income Only Trust, a.k.a. Miller Trust to qualify if your income exceeds the income cap.
So, income is rarely a reason to be denied. See Video here.
4. What is the worst pitfall if you file too soon for ALTCS?
Applying too soon can cause a needless period of ineligibility.
How can that happen, you say?
Let’s say that your father or mother is applying for ALTCS. Medicaid looks back at transactions from five years ago. So, let’s say it is January 1, 2024, when they apply.
The five years would be from January 1, 2019, to December 31, 2023.
So, say that your father or mother was handling their own finances in 2019 and 2020.
During that time, let’s say July of 2019, they had a habit of going to the bank, drawing out cash to pay bills, and have with them rather than using debit, checks or credit cards.
Most of this was done in 2019 and early 2020. If you apply now the look back will take this period into account. If just wait a few months, this same time period will drop off and not count in the lookback period.
5. What does it mean to be “Otherwise Eligible?”
They would be eligible if it were not for a gift.
As already pointed out, gifting assets in Arizona to qualify is allowed. It just causes a penalty period.
The ALTCS Applicant will be approved, and they will just have a start date in the future. This funture date is determined by the “Penalty Divisor,” which as of July 1 2024 is $7,867.16 in Maricopa and Pinal Counties and $7,281.17 in the rest of the state.
To determine the date of eligibility, the Gift Amount (GA) is divided by the Divestment Penalty Divisor (DPD). This equals the Period of Ineligibility (POI). (Formula: GA ÷ DPD = POI )
As mentioned, gifting is not illegal. It just causes a period of ineligibility.
Take a single applicant that may have been giving his granddaughter money for college and he bought her a car to get to college. Let’s say over a 4-year period, this amounted to about $50,000.
The $50,000 is divided by $7,867.16, which equals 6.36, or approximately six months and 17 days.
This means that he will be approved, just not for six and a half months.
The application process can take 45 to 60 days, so 1.5 to 2 months of the penalty is eaten up by the application process.
Because of this, I often suggest that a gift of $11,800 to $15,734 is made before the application is started to take advantage of this time.
In other words, gifting of assets is, in part is, a cornerstone in a Medicaid or ALTCS Plan, particularly for single applicants.
6. When does the penalty period for uncompensated transfer of assets begin?
When the applicant applies for ALTCS insurance benefits.
This can be a big advantage to many…..
If you have a gift that was almost five years ago, you can wait a few months to file and the will not have any effect on the application.
Going back over past 5 years of records can be a smart thing to do in some cases before you or a loved one applies for benefits.
7. What are ways to ‘Legally” transfer assets to qualify for ALTCS?
Hiding them from the State ALTCS office is not one of them. Convert them from countable to uncountable assets.
Here are the nine ways to legally convert an asset so they don’t count.
- Turn a countable asset into non-countable income using a Medicaid Compliant Annuity or MCA.
- Paying off debt
- Buy a new home
- Make home improvements
- Buy a new car
- Purchase personal property
- Making a gift
- Prepaying final expenses
- Put assets in a Medicaid Asset Protection Trust (5-year wait if trust is used)
8. What can be done if a loved one is a gambler and has lost money in the past 60 months?
Gambling is not against the rules, so apply as soon as possible. Prove that the
losses or asset reduction was due to gambling and then apply.
This is upsetting to most. The rules do not allow you to help a grandchild pa for college but you can but your money on “BLACK,” lose it all, and still get Arizona Medicaid / ALTCS Benefits. I have help on a couple cases where the was gambling involved. In one case, it amounted to over $200,000. The application was approved!
9. What is one of the biggest Medicaid mistakes people make?
They improperly transfer a home property to a loved one, another is the belief that life insurance does not count as an asset.
Probably the biggest mistake is putting the name of the person applying for ALTCS on the adult child’s bank account out of convenience or home property.
Understand I didn’t say they put the adult child’s name on the applicant account out of convenience, they put the applicant’s name on the adult child’s account.
This causes a number of issues, and the state will question this and count the assets as applicants, causing the applicant to be over-resourced and denied. There are ways to correct this issue, but it isn’t easy.
Another similar mistake is putting the applicant’s name on a home. I had a case once that the daughter purchased a home for her mother.
I asked the daughter why she thought this was a good idea and the daughter responded with. “I felt bad for my mother, and I wanted my mother to feel like she owned something.”
Her mother did not contribute any money to the purchase only lived in the home for about 5 years before a application was filed with ALTCS. The state of Arizona considered this a
gift to her mother and when they went to sell the home 100% of the proceeds were
considered the mothers not the daughter who contributed the gift.
If you have done these types of things it is a good idea to consult with a Certified Medicaid Planner before an application is started with Arizona Medicaid – ALTCS.
10. What is the best way to cure or correct an uncompensated gift?
There are really only two choices.
- Give the gift back, then convert it to a non-countable asset.
- Wait out the penalty period.
The problem with the first one is too often the gift is gone and has been used to by the giftee. And there is no way to recover it. So, waiting out the penalty period is the only option.
Or possibly file a hardship appeal. This type of appeal may be worth a try. Consulting a Certified Medicaid Planner may be a smart move.
11. When should someone consider appealing a denied application?
Medicaid qualifications are both medical and financial, and each can be appealed.
Medical: If they did not get the proper consideration for the applicant’s activities of daily living or ADL’s.
I have had several cases where the medical caseworker do not give the points for all the ADL’s.
One in particular, the state worker, only gave a total of 42 points. The worker gave zero points for mobility even though the applicant used a wheelchair most of the time and zero points for cognitive impairment and there was a full neurology study done too.
We appealed this and won!
If the caseworker made an error while processing the application. This is a common problem.
This is why it is important to hire a Certified Medicaid Planner who knows the rules and can see obvious errors and get them resolved before the application is denied. But if it is denied they can help in the appeals process.
12. Not hiring a Certified Medicaid Planner to help with the application process.
Arizona Medicaid or ALTCS qualifications are complex. As mentioned, it is not uncommon for even an ALTCS financial caseworker to make mistakes and deny claims that should have been approved.
The cost of long-term care today due to the inflation of the past several years has made even a well-planned retirement nest egg prove to be inadequate.
Medicaid planning can ensure that the applicant takes advantage of all rules and regulations so that the applicant does not pay more than what the Medicaid law requires.
A Certified Medicaid Planner™ will help with the following:
- A CMP can help by avoiding missed deadlines:
- Avoid sending in incomplete applications.
- Reduce Stress
- Representation in the Appeals Process
Watch the video for CMP?
What is the cost to hire a CMP?
The cost is directly associated with the complexity of the case. Generally, it is less than one
months cost of care long-term care.
Care Funding Solutions owners Steve Dabbs and Cecilia Dabbs are both Certified Medicaid Planners.
Cecilia Dabbs is also a Legal Document Preparer, so if any legal documents are need to qualify, like an Income Only Trust, a.k.a Miller Trust, she is able to prepare this for the client.
Steve Dabbs is also an Accredited Investment Fiduciary® and investment advisor with over 30 years of financial planning experience. So he looks at not only the Medicaid rules but also how they two interact.
Dabbs is also a VA-Accredited Claims Agent and can help incorporate Veterans’ Pension benefits into the planning process.
Authors Steve Dabbs, CMP™ and Cecilia Dabbs, CMP™
480-967-8477
© Care Funding Solutions, LLC